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Wednesday, October 19, 2016

Medicaid's Spousal Impoverishment Allowances for 2017

The cost of care in a nursing home can devastate the lifetime
savings of a married couple. In recognition of this problem Congress passed a
law in 1988 which was intended to limit the "spousal impoverishment" that can
result when one spouse becomes a nursing home resident.

Under this Medicaid law, minimum amounts of financial resources and
income are protected for a spouse who is still living in the community. These
protected amounts are adjusted each year to account for inflation. The
adjustments are based on a Labor Department measure of inflation.

In October of each year the Labor Department publishes the
consumer price index for all urban consumers, all items, U.S. city average (the
CPI-U) for the month of September. Using that figure it is possible to calculate the Medicaid 2017 Community Spouse minimum and maximum resource allowances and maximum
income allowance.

What are Community Spouse Resource and Income Allowances?

In general, when your spouse is in a nursing home or needs assistance with home
care under a Medicaid Waiver program (like Pennsylvania’s Aging
Waiver program) he or she will not qualify for Medicaid benefits until your
combined financial resources are reduced to a certain level. That permitted
level of so-called “available resources” varies depending on your financial
circumstances.

Where one spouse is in a nursing facility the general rule is that the community spouse
can keep ½ of the amount of available resources that were owned by the couple
on the date of admission to the nursing facility. However, this standard
protected “Community Spouse Resource Allowance” is subject to a ceiling and a
floor. My projection of the ceiling and floor amounts for 2017 are set out below.

In addition to being allowed to keep the resource allowance, the community
spouse is also entitled to have a certain level of income called the Monthly
Maintenance Needs Allowance. This income allowance is also subject to a ceiling
and a floor. If the community spouse does not have the required level of
income, that spouse may be allowed to keep some of the institutional spouse’s
income. If the income diverted from the institutionalized spouse is still
insufficient, the community spouse may be able to keep additional resources.

What are the Resource and Income Allowances for 2017?

Although the 2017 figures have not yet been formally announced by the Centers
for Medicare and Medicaid Services (CMS), by law they are based on the consumer
price index for all urban consumers published by the Bureau of Labor Statistics
(the CPI-U) for September of the prior year. The CPI-U for September of 2016
has now been released. This allows me to provide readers with my unofficial
calculation of the community spouse resource and maximum income allowance for
next year.

In 1988, the Medicaid law established the initial community spouse resource
allowance at levels of $12,000 minimum and $60,000 maximum for 1989 based on
the CPI-U for September 1988. The initial maximum income allowance was set at
$1,500. The law provides that these levels be increased by the same percentage
as the percentage increase in the CPI-U between September 1988 and the September
before the calendar year involved.

The 2017 Allowances

The CPI-U for September 1988 was 119.8. The CPI-U for this September (September
2016) was 241.428 or higher by a factor of 2.015 [241.428/119.8= 2.015] This allows me to project that the spousal protection allowance figures for 2017 will be as follows:

Minimum Community Spouse Resource Allowance for 2017 = $24,180.

Maximum Community Spouse Resource Allowance for 2017 = $120,900.*

Maximum Community Spouse Monthly Income Allowance for 2017 = $3,022.50. (Note: The Minimum
Monthly Income Allowance remains at $2,002.50
– it will be adjusted on July 1, 2017. The income allowances are higher for
residents of Hawaii and Alaska.)

Readers should understand that the Community Spouse Resource
Allowance is a starting point for planning. A community spouse can typically
protect resources far in excess of his or her resource allowance through
Medicaid planning techniques such as the purchase of a Medicaid qualified annuity. (Be sure to
consult an experienced elder law attorney before purchasing an annuity for
purposes of qualification for Medicaid benefits.)

The allowances discussed in this post can be calculated from the September
CPI-U. But they have not yet been formally announced by the Centers for
Medicare and Medicaid Services (CMS). It is possible that CMS could ultimately
announce figures that are slightly different than those above. But my
projections have been correct in the past and I have a reasonable degree of
confidence in them.

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About Me

I am a Pennsylvania lawyer with over 35 years experience in estate planning and elder law. I was selected by US News Best Lawyers® as its Lawyer of the Year in Elder Law for 2014 for the Harrisburg, Pennsylvania metropolitan region.
I am of counsel to Marshall, Parker and Weber, a law firm which has offices in Williamsport, Jersey Shore, Wilkes-Barre and Scranton, Pennsylvania. I am past President and a founder of PAELA (the Pennsylvania Association of Elder Law Attorneys). However, the views expressed on this site are my own and not those of PAELA or of Marshall, Parker and Weber.
Most importantly I am a husband, father and grandfather.